WASHINGTON (AP) — US homebuyers pulled back in July, as sales declined amid a shortage of available properties and steadily rising prices.
Sales of existing homes fell 3.2 percent last month to a seasonally adjusted annual rate of 5.39 million, the National Association of Realtors said Wednesday. The decline marks a reversal from rising demand that pushed sales in June to their highest level since February 2007.
Fewer homes are coming onto the market, putting a cap on the sales growth enjoyed earlier this year thanks in part to a low mortgage rate and brightening job market. Rising demand for homes is a positive. But the dwindling supply of listings has pushed up prices, which suggests a market not yet at full health.
This mismatch between supply and demand creates an environment of limited sales growth and escalating home values.
"Sales are not rising as much as they are capable of, but prices are rising at a faster than sustainable clip," said Stephen Stanley, chief economist at Amherst Pierpont Securities.
The number of listings has tumbled 5.8 percent from a year ago to 2.13 million, meaning that would-be homebuyers are struggling to find attractive properties in their price range and may be delaying their purchases.
Inventories have fallen on an annual basis for the past 14 months, an indication that many homeowners are still recovering financially from the housing bust that triggered the Great Recession almost a decade ago. Without sufficient equity in their current homes, many of these owners would be unable to generate a down payment for another home with the proceeds from a sale.
The decrease in listings has corresponded with home values rising at more than double the pace of average hourly earnings, making many homes less affordable for potential buyers.
The median home sales price was $244,100 in July, up 5.3 percent from a year ago.
Sales last month fell 13.2 percent in the Northeast, with declines in the Midwest and South as well. Purchases rose 2.5 percent in the West in July.
Builders are attempting get more homes on the market. Sales of new homes climbed 12.4 percent last month to a seasonally adjusted rate of 654,000 annual units, the strongest level since October 2007, the Commerce Department said Tuesday.
Yet demand has eclipsed even that surge. Just 4.3 months' supply of new homes is available on the market, down from 5.2 months a year ago.
"Homebuilders continue to thrive on healthy demand while homebuyers remain stifled by anemic inventory," said Ralph McLaughlin, chief economist at Trulia.
One thing that would-be buyers have in their favor, in addition to the improved landscape for jobs, is near record-low mortgage rates.
Mortgage buyer Freddie Mac said the average 30-year fixed-rate mortgage fell to 3.43 percent last week from 3.98 percent a year ago. The average rate has historically been closer to 6 percent.